Hillsborough turns out to be a great place to live based on auto insurance rates.File photo

HILLSBOROUGH — Few people are excited about the costs of automobile insurance, but drivers in Central Jersey do have something to be cheerful about.

New Jersey still tops the list of the most expensive states in the country to buy automobile insurance, with the top 10 rounded out by the District of Columbia, Louisiana, New York, Florida, Delaware, Rhode Island, Connecticut, Maryland and Michigan, according to industry figures.

But residents of what NJDBI calls the Hillsborough territory, comprised of most of Somerset and Hunterdon county and portions of Morris and Mercer counties, pay the lowest average annual premium in the state — $1,547.82. That's 27.3 percent below the statewide territorial average of $2,130, based on a report on the Online Auto Insurance website.

That report analyzed 28,665 insurance premium quotes from 65 different insurers from data collected by the New Jersey Department of Banking and Insurance, or NJDBI.

Residents of the nearby Hackettstown territory pay an average premium of $1,556.25, or 26.9 percent below state average, Bridgewater territory residents pay $1,570.60, or 26.3 percent below average, and Bound Brook territory residents pay $1,788.12 or 16.1 percent lower than the state average.

Newark and East Orange residents pay the highest average premiums in the state, coming in first and second. The Newark territory, which includes Irvington, averages $2,780 per year, or 30.4 percent above the state average, and the East Orange territory, including Orange, follows at $2,760, or 29.6 percent above the state average.

A number of factors can affect individual drivers' car insurance rate, including their hometown's demographic makeup, its claims history, crime rate, population congestion, and more, the report concluded.

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Marshall McKnight, an NJDBI spokesman, said each territory has many factors that come into play as to what an individual could pay for their insurance. He said the territory in which the insured lives is still a factor, but not nearly as strong as it had been for decades.

"It's highly individualized these days," McKnight said. "The kind of car you're driving, the number of people in the household and their driving records, the insurance score of an individual and their claims history."

But McKnight said the main factors are the high cost of medical insurance and personal injury protection.

"These costs have been driving up the rates for the last few years," McKnight said.

He said the division has taken action to help reign in those costs, including fostering more competition between insurers.

McKnight said that before 2003 when New Jersey's auto insurance reforms were passed, there was a crisis of availability where drivers were having trouble getting any kind of coverage at all. But now a wider variety of ratings factors have come into effect, and the rates approval process has been streamlined, allowing for a more competitive market.

"Nine out of the top 10 national insurance companies are now in the state," McKnight said. "So while there is upward press due to medical costs, there's a downward pressure when people can shop around and save."